Refiners in the country cut imports of Iranian oil last month, as they started weaning their plants off crude from the country to avoid sanctions by the US that are set to take effect in November.
India’s monthly oil imports from Iran declined to 592,800 barrels per day (bpd) in June, down 16 per cent from May, according to data from industry and shipping sources.
The US in May said it would reimpose the sanctions after withdrawing from a 2015 agreement with Iran, Russia, China, France, Germany, and Britain, where Tehran had agreed to curb its nuclear activities in return for the lifting of earlier sanctions.
India, Iran’s top oil client after China, asked refiners last month to prepare for drastic reductions or even zero Iranian oil imports.
The first set of sanctions will take effect on August 6 and the rest, notably in the petroleum sector, following a 180-day “wind-down period” ending November 4.
US officials said in June they would push countries to reduce their Iranian oil imports to zero. Indian refiners would want to comply with the limits to maintain their access to the US financial system.
“The Trump administration will push for zero crude, condensate and products exports from Iran,” said Sri Paravaikkarasu, head of East of Suez Oil at energy consultancy FGE. “The zero tolerance policy and pace with which it is moving no doubt concerns Iran’s current crude oil buyers.”
Overall, India’s oil imports in June rose 10.1 per cent from a year ago to 4.82 million bpd, data showed. Overall purchases climbed on a higher intake of crude from Mexico, the US and Azerbaijan. Imports from other West Asia suppliers also increased.
Lower purchases by private refiners dragged down India’s June imports from Iran although state refiners stepped up purchases.
People in the know told Reuters last month that private refiners Nayara Energy and Reliance Industries Ltd plan to halt Iranian oil imports. The two firms significantly cut their imports from Iran in June.
HPCL-Mittal Energy Ltd continued to skip Iran oil imports for a second month in June, the data showed.
State refiners, accounting for about 60 per cent of India’s nearly 5 million bpd of refining capacity, lifted 10 per cent more Iranian volumes in June as compared to May, at about 454,000 bpd, data from the sources showed.
The people declined to be identified since they are not authorised to speak to the media. On a yearly basis, imports from Iran were 19.5 per cent higher, the data showed.
State refiners had reduced Iranian oil imports in FY18 financial year because of a dispute over the development rights for an Iranian natural gas field.
However, state refiners raised their imports in the current fiscal year starting in April after Iran offered free shipping and an extended credit period of 60 days.
For the first six months of 2018, India’s Iranian oil imports increased by 8.4 per cent to 585,000 bpd.
In April-June 2018, imports from Iran rose by about 24 per cent from the previous quarter to about 647,000 bpd, the data showed.